Louis Vuitton Case
According to HSBC in February 2009, Japan was the final destination of 45 percent of luxury goods sold worldwide. According to Claudia D’Arpizio, Japan is the world’s largest market, consisting of the highest per capita spending for luxury goods. Japan is known for a group-oriented culture, which creates pressure for its citizens to possess luxury, status-driven products such as Louis Vuitton (LV). This makes the Japanese luxury market easily penetrated by new and innovative fashions. According to Davide Sesia, president of Prada Japan, Japanese Women, to a much greater extent than Europeans have a “psychological need to own something considered to be beautiful”1. In the late 1990’s, LV created limited- edition collections to claim a prestigious role. This was their marketing strategy to gain the attention of their upper class customers which reinvigorated the brand identity as well as earning them market share. In addition, Japanese people are considered to spend more time out of their residences than any other culture. In Japan, looks are a direct correlation to a person’s social position, which persuades Japanese to shop for luxury items.
Quality is a key factor for successful brands in Japan. LV has a focus on constant improvement of quality and offer lifetime repair guarantees for its products. In 1996, Azzedine Alaia, Manolo Blahnik, Romeo Gigli, Helmut Lang, Isaac Mizrahi, Syvilla and Vivienne Westwood were hired to create a limited edition series featuring the Louis Vuitton monogram. Also, in 1998, designer Marc Jacobs, a successful American international designer was hired to be their new art director to insure their shoes and ready-to-wear collections were desirable to consumers. Its loyalty based strategy provides customers with maximum quality, creating an endless desire in LV products. Due to the desire for high end products, LV never planned to manufacture products in countries that produced goods for cheaper labor. Eleven out of thirteen LV factories are located in France; quality control in France is very high, as are the expectations of LV customers. All products were tested on mechanical arm hoists, zippers were tested 5,000 times, and other products such as jewelry were tested by being strongly shaken to insure charms would not fall off.
LV faced many opportunities and challenges within the Japanese market, the most challenging being the down turn in the economy do to the 2008 global recession. In addition to the slowed economy, LV faced challenges from competitors entering the Japanese market, counterfeiting, brand dilution and the changing attitudes towards luxury brands such as LV.
LV also had opportunities presented to them within the Japanese market, being one of the oldest luxury brands LV needed to keep reinventing itself in order to hold on to its market share. This reinvention was met through offering new products such as ready to wear pieces and limited editions.
One of the major challenges within the Japanese market was dealing with increased competition. Since LV was the first luxury brand to open its own store in Japan and be successful at it, many other luxury brands soon followed. These luxury brands included such companies as H&M, Gucci and Burberry. Smaller brands such as the Swedish company H & M were able to offer high quality items at competitive prices. The business models that these smaller companies followed allowed them to compete with the larger luxury brands much more quickly. One way LV has dealt with this competition is by introducing less expensive accessories such as; wallets, clutches and travelers.
Another challenge that LV has faced in the Japan market is the counterfeiting of their bags. Many of these bags flooded the Japanese market from such cities as Los Angeles, Hong Kong and Seoul. The counterfeits were successful within the Japanese market because they provided a less expensive...
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